Category: ERISA

When is it “too late” to make an insurance claim?

Let’s say the insurance company denies your claim. They don’t dispute you had a covered loss, but they say you missed a deadline buried in your insurance policy requiring you to notify them of the claim within a certain time. Can they do that?

The answer, often, is no. But the devil’s in the details.

Virtually all insurance claims involve important deadlines. For instance, there can be deadlines to tell your insurance company about the claim, to provide the insurer with documentation about the claim, to appeal the insurer’s denial of a claim, or to file a lawsuit. Which deadlines apply and the effect of missing them depend on the details like the insurance policy fine print and whether the policy is subject to ERISA.

Because the rules can vary and the consequences of missed deadlines can be draconian, it’s critical to consult an attorney to know your rights and obligations. Here are some general examples:

Deadlines to notify your insurer about the claim. Most insurance policies require you to notify the insurance company of your claim within a certain time period. Sometimes it’s “as soon as possible.” Sometimes’s it’s a specific date, for example, within one year of the loss.

The consequences of missing a claims notice deadline vary, but, often, the insurer cannot deny your claim just because you missed the deadline to give them notice. If you’re in Washington State, most insurers can’t deny claims just because you gave them late notice – the insurer has to prove that your delay in giving notice hurt the insurer’s ability to investigate your claim. If your delay in giving notice doesn’t stop the insurer from investigating your claim, the insurer typically can’t use the late notice as an excuse to deny coverage.

That means if your insurer denies your claim because you gave them late notice, there is a good chance you could challenge the denial. But beware – this rule does not apply to every insurance policy, especially policies subject to ERISA.

Deadlines to provide the insurer with information about the claim. Most insurance policies contain language requiring the policyholder to cooperate with the insurer by providing information about the claim. That could include, for example, allowing the insurer access to your home for a homeowner’s insurance claim, or providing the insurer medical records for a disability insurance claim.

Many insurance policies contain no specific deadline for you to provide this information. However, insurers will sometimes give you an arbitrary deadline to provide information they demand. They may tell you they will deny the claim if they don’t receive certain information by a specific date.

Similar to the claims-notice deadline, insurers typically have to prove that your delay in providing information harmed their investigation in order to deny coverage on this basis. But there are exceptions, and it’s important to bear in mind that policyholders have an obligation to cooperate with their insurers, which generally includes responding to reasonable requests for information. And, as a practical matter, looking obstructionist rarely helped anyone’s court case.

Deadlines to appeal the insurer’s denial of a claim. Many insurance policies provide that, if the company denies a claim, the policyholder can “appeal” the denial internally. An internal appeal means the company takes another look at the claim and any new evidence the policyholder submits.

Policyholders often have deadlines, sometimes just a few weeks, to submit an appeal. In some insurance policies, the appeal is voluntary, so failing to submit an appeal on time is unlikely to affect your rights. Other insurance policies – especially those governed by ERISA – make the appeal mandatory. That means missing the appeal deadline can cause you to permanently give up your right to contest the denial or seek insurance benefits.

Deadlines to file a lawsuit if your claim is denied. If it becomes necessary to go to court to fight an insurance claim denial, it’s critical to know the applicable statute of limitations, i.e., the deadline by which you have to file a lawsuit. Failing to file suit within the statute of limitations can mean you permanently lose the right to go to court. Most statutes of limitations are at least year from the date of loss. But there are important exceptions that depend on the details. For example, many homeowner’s insurance policies require you file suit within one year of the date of loss. Also, ERISA-governed insurance policies typically have far shorter deadlines to file suit – sometimes measured in days.

The upshot is that filing a late claim doesn’t make it a foregone conclusion that you lose your right to insurance benefits. If the insurance company denies your claim because you missed a deadline, there are often steps you can take to contest the denial and, potentially, obtain insurance benefits notwithstanding the missed deadline. But it’s critical to have an attorney review the facts and your insurance policy to make sure you know what deadlines apply and the consequences of missing any deadlines.

Know Your Rights – ERISA Claim Deadlines

We’ve previously blogged about the importance of meeting deadlines in your claim for benefits under an ERISA-governed insurance policy.  Most ERISA plans have strict deadlines for submitting a claim, appealing the insurance company’s denial of your claim, and filing a lawsuit.  The deadlines are strict and ERISA is draconian about deadlines – missing them by even a day can cause you to permanently lose your claim with no recourse.

The good news is that the insurance company and ERISA plan have to follow their own deadlines in handling claims for benefits.  The federal Department of Labor, the agency with oversight over ERISA plans and insurance companies, has a regulation mandating ERISA plans and insurance companies subject to ERISA give ERISA claims full and fair review.  Part of this regulation requires insurers to decide ERISA claims within certain deadlines.

For claims under ERISA-governed disability insurance policies, the insurer must decide the claim within 45 days.  The insurer can extend this deadline by up to 60 days, but must show circumstances outside the insurer’s control in order to do so.  Also, the insurer must notify you of the extension before the initial deadline expires.  Even if the insurer gets the extension, they have to tell you the date they expect to decide your claim.

For claims under ERISA-governed group health insurance plans, the deadline depends on the type of claim. Urgent care claims must be decided within 72 hours. Claims involving an ongoing course of treatment must be decided within 24 hours. Pre-service claims must be decided within 15 days.  And post-service claims must be decided within 30 days. Like disability claims, these deadlines can sometimes be extended, but only under limited circumstances.

If the insurance company misses the deadlines, there are important consequences.  First, you’re entitled to file a lawsuit without waiting for the insurance company to finish its review.  That means you can have your case heard by a judge weeks or months before you otherwise might. Second, once you’re in court, the court may apply greater scrutiny to the insurer’s handling of your claim because the insurer disregarded the ERISA deadlines.

Importantly – and fairly – courts are holding insurance companies to these deadlines just as strictly as they hold claimants to deadlines.  In the recent case Fessenden v. Standard Reliance Life Insurance Company, the Seventh Circuit Court of Appeals held these deadlines are a “bright line”.  Writing “What’s good for the goose is good for the gander,” the court determined that the insurer’s missing the deadlines by even a day violates the rule and allows the claimant to file suit immediately.

 

ERISA Plans Can’t Discriminate Against Domestic Partners, Court Rules

In Washington, and many other states, domestic partners enjoy the same rights and legal protections as spouses.  The Ninth Circuit Court of Appeals recently confirmed that domestic partnerships’ equal treatment under state law extends to ERISA plans.

ERISA plans typically give the plan administrator broad discretion to interpret the terms of the plan.  This often means the plan administrator has huge leeway in deciding who qualifies for benefits under the plan.  If the plan document leaves any room for interpretation, courts often defer to the plan administrator’s decision about who gets benefits, even if the decision seems unfair or counter-intuitive.

The Ninth Circuit’s decision in Reed v. KRON/IBEW Local 45 Pension Plan ruled that ERISA plan administrators’ discretion does not extend to discriminating against domestic partners when deciding who qualifies for benefits under the plan.

In Reed, David Reed and Donald Gardner had been in a committed, long-term relationship for decades, ultimately becoming domestic partners.  Gardner subsequently retired and began receiving pension benefits under the ERISA pension plan sponsored by his former employer KRON television.  The KRON ERISA plan entitled the spouses of pensioners who passed away to surviving spouse benefits.

After Gardner passed away, Reed filed a claim for surviving spouse benefits.  KRON’s plan administrator denied Reed’s claim.  The plan administrator claimed it was within its discretion to interpret surviving spouses as excluding domestic partners.

The court acknowledged that ERISA plan administrators are entitled to broad discretion, but nevertheless ruled in Reed’s favor.  The court noted state law “afforded domestic partners the same rights, protections, and benefits as those granted to spouses” and nothing in ERISA required otherwise.  The Court ordered the ERISA plan to pay surviving spouse benefits to Reed.

The Reed case is an important reminder that ERISA plan administrators’ discretion is not unlimited, and also represents an important victory for domestic partners.

How Do I Know Whether To Make A Disability Insurance Claim?

Many people understand that they have disability insurance coverage, but aren’t sure whether, when, or how to make a claim.  This confusion often results in people delaying in submitting a claim, which can potentially jeopardize their right to coverage.  Below is a guide to some of the issues you might consider in determining whether to make a disability insurance claim.

First, remember that the specific insurance policy language will determine whether you have a claim for disability benefits.  Always be sure to double check the actual insurance policy language – or have a lawyer do so for you – before making any decisions.  Also be mindful that the insurance policy may be comprised of many separate documents.  For instance, there may be an insurance policy contract, declarations pages, riders, amendments, and endorsements, all contained in what might appear to be separate documents.  And if your disability coverage is subject to ERISA, other employee benefit plan documents such as a Summary Plan Description may also affect your rights.

In particular, you will want to be familiar with how the policy defines “disability.”  Most disability insurance policies define “disability” to mean, basically, you can’t work because you are ill or injured.  But the devil is often in the details.  For example, does the policy require you to be unable to do your current job, or any job within your skillset, or any job at all?  Is a software engineer with cognitive impairment from a brain injury disabled if they can still flip burgers? Slight differences in the definition of “disability” can be critical.

Second, have a clear understanding of the medical basis for your disability – i.e., the injuries, illnesses, or other conditions that affect your life and prevent you from working.  You don’t need to be a doctor to make a disability claim, but having a clear picture of the diagnoses and limitations relevant to your disability will help you submit your claim clearly.  Absent clarity, some unscrupulous insurance adjuster may try to take advantage of the confusion to mischaracterize your claim as falling within one of the policy’s exclusions.

Third, be mindful of whether you have discussed with your employer any potential accommodations that could help you perform your job despite your disability.  Most of the time, employers are legally obligated to make minor changes to your job to enable you to continue working despite your disability.  If you can keep working with a reasonable accommodation, you may not be entitled to disability insurance benefits – and may not need them in the first place!

Fourth, be mindful of any applicable time limits to make a claim.  Be sure you are submitting your claim to the right people, using the right documentation, and meeting the right deadlines.  Don’t put yourself in a position of losing out on coverage through technicalities.

These are just a few of the many things you may want to consider when deciding whether to claim disability insurance benefits.  Please keep in mind that many other issues can come into play – and the best way to protect your legal rights is to talk to a lawyer!

Court Emphasizes Importance of Making Insurance Claims Promptly in ERISA Disability Dispute

A recent decision from our neighbors in the Portland, Oregon federal courts emphasizes that insurance policyholders should always strive to submit claims as soon as possible – especially where the insurance policy is covered by ERISA.

Often, it’s not practical to submit insurance claims as soon as the loss occurs.  When your house burns down, you’re critically injured, or have to stop working due to a disability, you’re often overwhelmed as it is without worrying about submitting insurance claims.  For this reason, many legal rules apply that can entitle an insured to benefits under an insurance policy even if the insured delays in submitting their claim.  These rules protect insureds from the otherwise-draconian result of losing insurance benefits they paid for due to a technicality.

However, the Oregon federal court’s recent decision in Gary v. Unum Life Insurance Company of America emphasizes that, sometimes, a delay in submitting insurance claims can completely eliminate the policyholder’s right to benefits, especially under ERISA.

Ms. Gary applied for Long-Term Disability benefits under an ERISA-governed disability insurance policy issued by Unum.  Plaintiff, an attorney, had become disabled and been ordered by her doctor to stop practicing law as of December 1, 2013.  But Ms. Gary waited until September 1, 2016 to make a claim for disability insurance benefits from Unum.

Unum ultimately determined Ms. Gary was disabled, but only from November 27, 2013 through April 6, 2015.  Ms. Gary filed a lawsuit under ERISA, seeking disability benefits post-April 6, 2015.  The dispute focused on Unum’s conclusion that Ms. Gary was essentially recovered from her disability following surgery in 2014.

The court upheld Unum’s denial of benefits after April 6, 2015.  The court focused on the absence of medical information regarding Ms. Gary’s condition as of April 6, 2015.  Critically, the court noted that it was impossible for a doctor to examine Ms. Gary in person and give an opinion about her medical condition that would be retroactive to April 6, 2015.  The court emphasized:

because Plaintiff’s claim was not filed until September 1, 2016, there was no opportunity for an [examination] or other evaluation of [Ms. Gary] by [Unum] in the nearly three years from the date of alleged disability. And while the Supplemental Record submitted by [Ms. Gary] provided some new medical evidence, it did not clarify [Ms Gary]’s limitations in the months following her surgery and around April 6, 2015.

Of course, there’s no way to tell if the court would have reached a different result had Ms. Gary applied for benefits immediately after becoming disabled.  But allowing a prompt medical evaluation following her surgery that could have armed her with additional medical information supporting her disability.

The Gary decision is an important reminder that it is always in the insured’s best interest to claim benefits promptly following a loss.